U.S. to Release LNG Export Review in 2012

Proposals for Export Terminals May Have Answers Soon

Several years ago, the future of domestic energy in the United States was altered when technology evolved to efficiently and economically extract natural gas from unconventional reserves.

Until then, the natural gas trapped in shale rock had been too difficult to tap. But when hydraulic fracturing was combined with horizontal drilling, the nation suddenly had access to previously unrecoverable reserves.

Since then, natural gas has been flowing freely from the Bakken shale in North Dakota, the Eagle Ford shale in Texas, the Marcellus shale in Pennsylvania, and other deposits across the country like the Barnett and Haynesville shales.

Monthly, production from these locations has been increasing and setting records. But last year's unseasonably warm winter combined with this year's record-hot summer weighed on demand – and prices.

The price of natural gas fell below $2 per million British thermal units (mmBtu) in April. Some companies began to pare back on the number of wells they were drilling, while others sold assets. Companies like Chesapeake Energy (NYSE: CHK) switched their focus from natural gas to oil.

And others began to look abroad.

Demand for cheap liquefied natural gas (LNG) is high in European and Asian countries, where the resource can cost between $10 and $15 per mmBtu. Exporting the resource from the U.S. would not only satisfy nations abroad – it would also drive up demand.

Only one natural gas export terminal has been approved so far. Cheniere Energy (NYSE: LNG) has been approved to turn its Sabine Pass LNG import facility in Louisiana into an export terminal.

But a number of others have been proposed. Cheniere also wants to construct an export terminal in Corpus Christi, Texas.

Dominion (NYSE: D) is looking to export LNG from Cove Point, Maryland. Southern Union (NYSE: SUG) is interested in a facility at Lake Charles, Louisiana. And Sempra (NYSE: SRE) has applied for a facility in Hackberry, Louisiana.

“We want to measure twice and cut once,” he said at the North America Gas Summit in Washington, D.C.

The analysis, however, is not the final decision; it's simply a glorified pros-and-cons list – a compilation and evaluation of the data, how the nation would benefit, and where the harm might be.

The Best Free Investment You'll Ever Make

Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the newsletter below.

Smith failed to indicate when the proposals would be definitively approved or denied.

Demand for natural gas has started to pick back up now as the weather gets colder, and natural gas futures are hovering around $3.74 per mmBtu. But prices are still expected to remain relatively low.

Exports, on the other hand, would likely drive prices up even further – one of the main reasons officials are reluctant to approve the numerous export facilities.But the companies would stand to benefit from higher prices, and higher demand could lead to more output. After all, flaring has become a common practice – burning off some gas at the site to slow down production.

And company leaders, like Octavio Simoes of Sempra, are concerned that the delays will cause the U.S. to lose these potential customers, like Japan, whose purchases will face even more delays due to the lack of a free-trade agreement with the U.S.

But the analysis will likely provide some indication of the Energy Department's sentiment. By the end of the year, it may not be too difficult to guess whether or not U.S. companies will be permitted to export U.S. LNG.

Energy & Capital's modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends. For more on Brianna, see her editor's page.

No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Energy and Capital does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law.

New Report: Nuclear's Worldwide Expansion

The report is yours, FREE. Just tell us where to send it. We'll also sign you up for our FREE Energy and Capital e-mail newsletter where you'll discover the foresight and vision to exploit the stock and investment opportunities of the new energy economy.